Tuesday, 6 October 2020

DPM Heng Swee Keat outlines Singapore's plans to get through COVID-19 pandemic and emerge stronger in Ministerial Statement on 5 October 2020

Economic support measures could save 155,000 jobs, pave way for future: Deputy Prime Minister Heng Swee Keat
Singpore's plan not just to get through pandemic but gain ground for next lap of growth as well
By Linette Lai, Political Correspondent, The Straits Times, 6 Oct 2020

The economic support measures being rolled out during the current crisis could save around 155,000 jobs over this year and the next, cushioning the rise in the resident unemployment rate by about 1.7 percentage points this year, said Deputy Prime Minister Heng Swee Keat yesterday.

More than half of the jobs saved are due to the Jobs Support Scheme alone, he said, adding that there will still be job losses.

The Monetary Authority of Singapore has also estimated that the four combined Budgets will prevent the economy from contracting by a further 5.6 per cent of Singapore's gross domestic product this year, and 4.8 per cent next year, he added.

Addressing Parliament ahead of a third Supplementary Supply Bill, Mr Heng said Singapore's plan is not simply to get through the pandemic. The objective at this "critical juncture" is to gain ground that will pave the way for the country's next lap of economic growth over the next five to 10 years, he said.

Laying out the Government's plans for growth, Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, added: "Let me stress that everything this Government does to protect, reopen and grow our economy - we do, not for the economy's sake, but for our people.

"We strive to secure a way for Singapore to continue to make a good living, so that Singaporeans can have a good life. This is our guiding principle."

The third Supplementary Supply Bill, which provides for this, will go through the usual parliamentary proceedings. It is scheduled to be debated by MPs next week, and has to be assented to by the President.

In his speech yesterday, Mr Heng outlined Singapore's progress in its fight against COVID-19. The multi-ministerial task force handling the crisis will release more details on the third and final stage of the country's phased reopening in the coming weeks, he said.

He also pledged to continue supporting households and added that support for businesses and workers will not taper off too sharply, even as Singapore shifts its approach to helping save jobs and firms.

On top of this, several support schemes will be further enhanced to help firms in hard-hit sectors, as well as those which are growing amid the coronavirus pandemic.

Mr Heng also laid out Singapore's refreshed, longer-term economic strategy which builds on the existing industry transformation maps to restructure various sectors.

First, Singapore will build up its role at the heart of Asia's growth, while forging connectivity with other key markets, Mr Heng said.

It also includes rebuilding physical connectivity in travel and trade, and strengthening digitalisation.

Transport Minister Ong Ye Kung will share more details today in his ministerial statement on Singapore's plans to revive its air hub and restore connectivity.

Second, the country will redouble its efforts to foster inclusive growth. Noting that COVID-19 has revealed vulnerabilities in Singapore's labour market, Mr Heng said it is necessary to better understand its structure, and upgrade jobs and skills across all segments.

But it will still be necessary to bring in global talent to complement local talent, even as Singapore carefully updates its foreign workforce policies, he added.

"By building on complementary strengths, we can build cutting-edge capabilities in our workforce and our firms, and plug into global networks. This will ultimately benefit all Singaporean workers."

Last, it will invest in economic resilience and sustainability as a source of competitive advantage. This includes producing essential supplies locally, and ramping up deployment of renewable energy.

Mr Heng reiterated that there are no plans to draw on past reserves for this latest support package, beyond what was approved earlier.

To fund its COVID-19 response, the Government had obtained President Halimah Yacob's approval twice this year to draw up to $52 billion from past reserves.

"We have dedicated close to $100 billion to support our people and businesses through this difficult period. As we do so, we must be careful not to spend in a way that squanders what generations before us have painstakingly built up," Mr Heng said.

"Our guiding principle is prudence, not austerity. We will continue to invest decisively in our national priorities, with a deep commitment to leave behind a better future for our children."

DPM Heng pledges to revive Singapore's status as an air hub and its global connectivity
Government will also hasten moves to boost Republic's maritime position, he says
By Hariz Baharudin, The Straits Times, 6 Oct 2020

Disruptions from COVID-19 may have thrown a spanner in the works for Singapore to be a well-connected air hub, but the Government is doubling down on efforts to restore the country's connectivity.

Pledging to revive Singapore's status as an air hub when global travel resumes, Deputy Prime Minister Heng Swee Keat also said in Parliament yesterday that the Government will work on building up the country to be a Global-Asia confluence of technology, innovation and enterprise.

"We must re-establish our position by reopening our borders gradually, positioning Singapore as a safe destination, levelling up capabilities and refreshing our infrastructure," he said in a ministerial statement on the country's progress in combating COVID-19.

Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, added that Transport Minister Ong Ye Kung will deliver a ministerial statement on reviving Singapore's air hub in Parliament today.

The Deputy Prime Minister further said the Government will hasten moves to strengthen Singapore's maritime position by improving transshipment capabilities, inking trade facilitation agreements and anchoring key shipping routes through the country.

More will be done in terms of regional maritime cooperation as well, and he cited the Iskandar Malaysia as well as Batam, Bintan and Karimun regions for the potential they hold. He also said Singapore will significantly strengthen its trade and logistics ecosystem and deepen capabilities in its port and airport.

Moves to bolster the country's digital capabilities are being accelerated, said Mr Heng, noting that they will be a "game-changer" for Singapore's connectivity with its global partners. He pointed out that Singapore has concluded Digital Economy Agreements with Australia, Chile and New Zealand, and is having talks with South Korea.

At the same time, companies in Singapore are getting help to exploit technology and have embarked on more than 27,000 projects to improve their productivity and build new capabilities through the Government's Productivity Solutions Grant and Enterprise Development Grant schemes, he said.

One example he cited is the Seonggong restaurant group, which manages brands like Seorae Korean BBQ. He met its founder last Friday, and said the group used digital technology to successfully revamp its operations, so much so that its deliveries from online orders have offset the losses from its dine-in business.

"The experience of businesses shows that digitalisation is a strategic capability to unlock growth, evolve their models to harness digital possibilities, and to integrate processes such as logistics, payment, and marketing," he said.

Work on transforming companies and industries through technology will continue for all businesses here, and a key government priority now is to take digital transformation to enterprises in the heartland.

Senior Minister of State Sim Ann and Minister of State Low Yen Ling will announce further plans for these firms in the coming days.

The Government will also unveil a new five-year Research, Innovation and Enterprise plan in December to enhance research to support areas of national priority.

These areas include early childhood development, lifelong learning and keeping seniors healthy.

The plan will also expand on efforts Singapore is undertaking to transform its manufacturing, aviation and maritime industries, and deepen its capabilities as a Smart Nation and sustainable society.

"By enhancing our connectivity and making innovation pervasive, we can better meet the challenges of a post-COVID world, and create good jobs and a brighter future for all Singaporeans," said Mr Heng.

Yesterday, he said that since 2017, the Future Economy Council has been driving the implementation of industry transformation maps to restructure Singapore's economy sector by sector.

Good progress has been made, he added, citing figures on employment, productivity and incomes.

• At the end of last year, Singapore's resident unemployment rate was at a low 3.2 per cent.

• Between 2016 and last year, the overall productivity, measured by real value-added per hour worked, rose by what Mr Heng called a creditable 2.4 per cent per year. This is an improvement over the 2.2 per cent growth in the preceding three-year period.

• Real median income for Singaporeans grew by 3.7 per cent per year in the last three years, up from 3.2 per cent in the preceding three years.

• Incomes at the 20th percentile grew by 4.4 per cent per year in the last three years, up from 4 per cent in the preceding three years.

"We are building on our good position, and keeping up the pace," said Mr Heng.

He added that the Government's task force to guide the country's economic recovery from COVID-19 will be setting up more industry-led alliances to devise ideas for projects and generate jobs for Singaporeans.

There are currently seven such Alliances for Action now, and the Emerging Stronger Taskforce is looking to launch more in new growth areas such as medtech.

Singapore's revenue position set to remain weak for some time
By Rei Kurohi, The Straits Times, 6 Oct 2020

Singapore's challenging fiscal position is the result of a global pandemic that no one could have predicted, Deputy Prime Minister Heng Swee Keat said yesterday.

In total, Singapore is dedicating nearly $100 billion to support its people and businesses, said Mr Heng, who is also the Finance Minister. But the country must be careful not to spend this in a way that "squanders what generations before us have painstakingly built up", he added.

"Our guiding principle is prudence, not austerity. We will continue to invest decisively in our national priorities, with a deep commitment to leave behind a better future for our children."

Mr Heng told Parliament that Singapore's revenue position will continue to be weak for a number of years, as the effects of Covid-19 on the global economy linger and the domestic economy slows.

At the same time, expenditure will rise as the Government continues to provide support for Singaporeans and businesses.

Mr Heng added: "In short, the Government is bearing a substantial part of the economy-wide adjustment during this crisis, through reduced revenues and substantial transfers to households and businesses."

The revised operating revenue is projected to be $63.7 billion, 7.4 per cent lower than the estimates presented in the Fortitude Budget in May. The decrease is mainly due to more subdued economic growth due to Covid-19 and lower economic activity during the circuit breaker period.

Revenue collection is expected to fall across all categories. Compared with estimates made at the start of the year, goods and services tax collections are expected to fall by 14 per cent.

The Government's projected total expenditure is $102.1 billion, 7.6 per cent lower compared with the Fortitude Budget estimates.

Special transfers are up 6.3 per cent compared with the May estimate and now projected to be $54.5 billion. The $3.2 billion increase is mainly due to the extension of Jobs Support Scheme to cover wages up to next March.

Meanwhile, the Net Investment Returns Contribution, which is the return on investments of Singapore's reserves, has not changed and is estimated to be $18.6 billion.

Overall, the Government projects a deficit of $74.2 billion for its 2020 financial year, $0.1 billion less than the Fortitude Budget projection.

Mr Heng said there is no additional draw on the reserves for the latest support measures announced yesterday, which include a one-off support measure for parents of newborn babies.

The minister said there was much work to be done "to transform our economy, and to build a fair and inclusive society, a sustainable and liveable city, and a safe and secure Singapore", and that "difficult choices" have to be made to fund them sustainably through higher taxes and more effective spending.

"We will also maintain a disciplined and judicious use of borrowing, reserving its use for long-term infrastructure whose benefits are spread across many generations," he said.

The past reserves have been critical in the nation's fight against Covid-19, Mr Heng noted.

Governments around the world have committed trillions of dollars to their pandemic response, and their record-high debt levels will take generations to pay off.

"We have avoided this outcome, because successive generations have built up strong reserves ahead of this crisis," said Mr Heng.

"We must have the discipline to start earning, saving and investing for the future again. Covid-19 is not our first crisis and certainly will not be the last."

Supporting vulnerable workers and upgrading skills key to growing an inclusive economy, says DPM Heng Swee Keat
By Yuen Sin, The Straits Times, 6 Oct 2020

Singapore aims to grow not just a vibrant, innovative economy, but also an inclusive one in which growth uplifts all Singaporeans, said Deputy Prime Minister Heng Swee Keat yesterday.

It will be achieved in two ways, he added, in a ministerial statement in Parliament.

One, by providing holistic support to uplift vulnerable workers, and two, ensuring workers have skills to stay relevant.

Lower-income workers have been hit particularly hard by Covid-19, he noted. They face a "twin challenge", as they are also in sectors that will be affected by longer-term structural changes in the economy, such as retail or the food and beverage sector, he added.

With middle-income and middle-age workers, they not only have heavy family responsibilities, but also face the challenges of a rapidly evolving labour market, said Mr Heng, who is also Coordinating Minister for Economic Policies and Minister for Finance.

There is even greater urgency for them to gain new skills and transition into jobs with good, long-term prospects.

He acknowledged that improving the job market for the more vulnerable workers is a relentless effort, requiring a shift in culture and employer mindsets beyond incentives.

But creative solutions for different groups of workers can be customised if Singapore adopts flexibility in job design, he said.

For instance, some workers find it hard to travel far for work, he noted. At the same time, some shops in the heartland struggle to find workers.

By putting such job openings on platforms such as social services offices and community centres, the matching of workers with businesses can be facilitated, he said.

He added that Minister of State for Trade and Industry as well as Culture, Community and Youth Low Yen Ling will look into how Singapore can better help displaced mature professionals.

Ms Low, who is also the chairman of the committee of mayors, will also explore how Singapore can make better use of micro-jobs to bring job opportunities closer to the heartland. More details will be announced later, Mr Heng said.

The Deputy Prime Minister further said the Government has been deliberate in channelling extra support to vulnerable groups.

For instance, mature and older workers are eligible for higher wage support and course fee subsidies in career conversion programmes.

The progressive wage model (PWM), a ladder that sets out minimum pay and training requirements for workers at different skill levels, is also an important labour policy innovation, Mr Heng said.

The PWM is more than a sector-based minimum wage, he added.

It is a four-in-one framework: a proper career ladder, skills upgrading ladder, productivity improvement ladder and wage enhancement ladder.

"These four upgrading ladders are mutually reinforcing," he said, reiterating the Government's commitment to expand PWM to more sectors while ensuring businesses in the sectors can absorb the change.

While the move will raise business costs and add to the difficulties faced by firms, Covid-19 has highlighted why it is critical for companies to be more manpower-lean, productive and have jobs that are attractive to locals to ensure their long-term survival, he added.

In the face of stiffer global competition and deep technological changes, as well as skills becoming obsolete faster, Singapore needs to continually reskill its workforce, Mr Heng said.

The Government is investing significantly for this to be done for every worker at every age, he added.

But even as Singapore levels up the skills of every worker, it will also need to bring in global talent to complement the home-grown talent.

"By building on complementary strengths, we can build cutting-edge capabilities in our workforce and our firms, and plug into global networks. This will ultimately benefit all Singaporean workers."

To achieve this synergy, he pledged that the Government will continue to update foreign workforce policies carefully, such as Employment Pass and S Pass rules.

Meanwhile, Mr Heng urged Singaporeans to join in the effort.

"Singaporeans, growing up in a multicultural society, have an edge in building relationships with people around the world, especially in a more fragmented post-Covid landscape. So let us build on this strength."

Temporary bridging loan scheme, enhanced training support package extended for 6 months to help firms
Schemes will continue, at reduced levels, to ensure support does not taper off too sharply
By Choo Yun Ting, The Straits Times, 6 Oct 2020

A scheme to help local companies manage their immediate cash flow needs will be extended for another six months.

The Temporary Bridging Loan Programme will continue until September next year, at reduced levels, Deputy Prime Minister Heng Swee Keat announced yesterday.

It is one of several measures that are being extended to ensure "support does not taper off too sharply" amid the coronavirus pandemic.

Further enhancements will also be made to existing schemes to help firms in both hard-hit sectors as well as those that are growing.

In his ministerial statement on the Government's strategy to emerge stronger from the pandemic, Mr Heng announced that the Enhanced Training Support Package will also be extended for a further six months, to June 30 next year, to provide enhanced course fee subsidies for firms in hard-hit sectors.

This will be available to firms in sectors such as air transport, retail and tourism, as well as marine and offshore, which was added to the list of eligible sectors yesterday.

The absentee payroll rates will also be lowered to 80 per cent from January, capped at $7.50 per hour, in recognition of the gradually recovering economic situation.

This will help companies preserve their core capabilities and enable workers to retain specialised skills, said Mr Heng, who is also Coordinating Minister for Economic Policies and Minister for Finance.

The Economic Development Board and SkillsFuture Singapore (SSG) said in a joint statement yesterday that they will work with appointed training partners to meet the demands of the marine and offshore sector.

SSG is partnering with the National University of Singapore, Ngee Ann Polytechnic, Singapore Polytechnic and NTUC LearningHub to offer 38 courses for the sector, in areas such as electrical power engineering, liquefied natural gas bunkering, shipyard safety and cyber security.

Across sectors, since March 1, more than 121,000 training places have been taken up under the enhanced training support package, with more than 41,000 employees from 1,000 firms benefiting from the initiative.

Other measures are also being put in place and extended for firms that are growing.

The higher tier of wage support, at 50 per cent, under the Jobs Growth Incentive (JGI) scheme, will be provided to firms that hire persons with disabilities between last month and February next year.

The JGI, which was announced in August, provides up to 50 per cent of wage support to firms which hire locals, on the first $5,000 of gross monthly wages for up to 12 months.

Several grants and programmes - the Market Readiness Assistance Grant, Productivity Solutions Grant, Enterprise Development Grant and the Pact programme, which encourages collaborations between companies - will also be enhanced to enable firms to tap new sources of growth.

In addition, the Monetary Authority of Singapore (MAS) will extend the MAS Singapore Dollar facility for Enterprise Singapore (ESG) loans, which provides lower-cost funding for banks and finance companies to grant loans overseen by ESG, until September next year.

Support to help Singapore enterprises access financing in areas such as trade and project needs will also be adjusted, Mr Heng said.

Further details on these support measures and schemes will be announced by the Ministry of Trade and Industry and MAS.

How resilient economy, going green can boost growth post-coronavirus
By Lim Min Zhang, The Straits Times, 6 Oct 2020

To prepare for growth in the post-coronavirus years, Singapore needs to produce essential food and medical supplies locally, invest in and adopt energy-efficient technologies, and seek new business opportunities in the growing "green" economy.

These efforts will make the country's economy more resilient and sustainable and, in turn, give it a competitive advantage, said Deputy Prime Minister Heng Swee Keat yesterday.

The building of such economic resilience and sustainability is one of three "priority areas" in Singapore's refreshed economic strategy for a post-Covid-19 world. It was set out in a ministerial statement in Parliament by Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister.

Economic resilience, however, is not a new idea for Singapore, he said, noting that the country has achieved resilience through a diversified economy, with multiple engines of growth.

"No one industry accounts for more than 20 per cent of our GDP (gross domestic product), so we do not put all our eggs in one basket."

As a result, Singapore was on a relatively strong footing when the Covid-19 pandemic struck, he said.

It had enough medical supplies and essential goods for its people and healthcare workers because of its national stockpile, which was backed by local production and a diverse network of trading partners, Mr Heng said.

But the pandemic also exposed vulnerabilities. Across the world, there were shortages of essential goods and critical inputs for industrial production as well as a halt in access to workers owing to work stoppages and travel bans.

Demand also ground to a halt in many industries, Mr Heng added.

"We must therefore act now to improve our economic resilience.

"In doing this, we may have to creatively combine the efficiency of having things ready 'just in time' with the resilience of building buffers 'just in case'."

One way to reinforce resilience and grow is to produce essential supplies locally, which are not just for use domestically but can be exported as well, Mr Heng said, citing medical supplies such as masks and test kits.

Another example he gave was food. Singapore has set a "30 by 30" target, which means to produce 30 per cent of its nutritional needs locally by 2030, up from less than 10 per cent today.

The technology used, such as in seeds and alternative proteins, can be exported. "We can grow these capabilities, building on our strengths in research and development and our standing as a trusted hub," Mr Heng added.

An important part of a resilient economy is environmental sustainability, especially for a future that is low carbon and resource constrained, he said.

It is also an opportunity for the green sector to be a growth industry in its own right, he added.

Singapore is transforming its industries to be more sustainable, by continuing to invest in research into energy-and resource-efficient technologies. They will be encouraged to invest in these technologies through incentives from government agencies.

Singapore will also set itself up as a carbon services hub in Asia, with demand for related engineering, legal and consultancy services expected to increase in tandem with efforts to limit growth of carbon emissions, said Mr Heng.

With finance also being an important enabler of green growth, financing solutions and markets in Singapore are being developed to help firms finance their adoption of more sustainable practices.

These moves, taken together, serve a dual purpose, said the Deputy Prime Minister.

"They strengthen our economy so that we can bounce back quickly and better from shocks, while adding to our value proposition as a vital global node in Asia.

"In turn, all these initiatives will create many new opportunities and valuable jobs for our people."

Preparing firms, workers for future even as Singapore's coffers take a beating
By Grace Ho, Senior Political Correspondent, The Straits Times, 6 Oct 2020

If there were fears that "zombie" firms would be kept alive by a drip-feed of state aid, or that certain segments of Singaporeans would be left behind in the future economy, Deputy Prime Minister Heng Swee Keat put them to rest in his ministerial statement yesterday.

There was always the risk that blanket Covid-19 support by governments around the world would merely prop up the corporate undead - especially in sectors where consumer habits have shifted for good.

But Mr Heng, who is also the Coordinating Minister for Economic Policies and Minister for Finance, made it clear that the authorities here will turn their focus to measures that prepare workers and viable firms for the future.

For employees, this means reskilling and upskilling, which will make it easier for them to move between firms and industries.

The latest move is to extend the Enhanced Training Support Package until June next year, to provide course fee subsidies for firms in the hardest-hit sectors.

Persons with disabilities - a group often singled out by MPs as needing more visibility and help - will receive the higher tier of 50 per cent wage support under the Jobs Growth Incentive, which encourages firms to hire locals.

For firms seeking to go global and go digital, a slew of capability-building grants will be further boosted.

Mr Heng broke down what he called a "refreshed" national economic strategy into three priority areas: remaking Singapore as a Global-Asia node of technology, innovation and enterprise; fostering inclusive growth, including for the lower-income, the differently abled and senior workers; and investing in economic resilience and sustainability as a source of competitive advantage.

He stressed that the Government has been "deliberate" in channelling additional aid to vulnerable groups when designing support schemes; and that economic resilience is not a new concept for Singapore.

"We have achieved resilience through a diversified economic structure, with multiple engines of growth.

"No one industry accounts for much more than 20 per cent of our GDP (gross domestic product), so we do not put all our eggs in one basket."

Yesterday's ministerial statement emphasised building capabilities for the future and rightly so, because firms and workers must pivot in order to thrive in a new world.

But the world today is still a long way from normal.

Recovery remains patchy. While global factory output has made up almost all of the ground it lost during lockdowns, services activity is still below its pre-pandemic level, as consumers remain skittish about being infected in large crowds.

The aviation sector continues to limp along, with the number of scheduled flights barely half what it was before Covid-19 struck.

Not everyone will be able to return to their old jobs, assuming these still exist. Reallocating redundant resources to productive firms will take time.

Mr Heng acknowledged the difficulties ahead, especially those faced by vulnerable and mature workers. He spoke of a targeted approach, for instance, by matching them with opportunities in the heartland where firms may find it tough to hire workers.

Touch points closer to home, such as social services offices and neighbourhood SGUnited Jobs and Skills centres, can help reduce job search friction.

But one imagines that the issue of whether the measures are merely incremental will rear its head once more, when Parliament debates the statement on Oct 14.

Should there be some form of limited universal basic income or unemployment insurance? Will the topic of a minimum wage come up again?

Economic research on these issues can be difficult to parse, and arguments often turn on specific industry and national circumstances.

Those arguing for such changes must weigh them against other policies that also help the working poor, such as subsidies and cash grants to low-income households.

Then there is the challenge of replenishing the state coffers.

Operating on the guiding principle of "prudence, not austerity", government expenditure has risen in the form of substantial transfers to households and businesses.

The Government's operating revenue is expected to be 16 per cent lower than initial estimates in February. Goods and services tax (GST) collections could fall by 14 per cent.

"We expect our revenue position to be weak for a number of years, as the effects of Covid-19 on the global economy linger, and our economy slows," said Mr Heng.

The decline in GST revenue is not unexpected, given the steep fall in visitor arrivals and lower level of spending and consumption.

Some have said that the impending GST hike - a rise of two percentage points some time between 2022 and 2025 - could come sooner rather than later to bolster tax revenues.

One thing is certain: Whether a vaccine can be found and rolled out quickly or not, there will be scars.

Jobs will be lost. Firms' reluctance to invest today will mean less productive capacity in the future.

Higher taxes also tend to depress consumption.

Children from vulnerable families could suffer more food, housing and psychological insecurity as Covid-19 drags on.

Just as the disease itself has persistent effects even after patients recover, the pandemic will leave the country feeling under the weather for some time to come.

Phase 3 roadmap to be unveiled in coming weeks, including timeline, size of group gatherings
Details to include timeline for moving to 'new normal', easing of curbs on gatherings
By Lim Min Zhang, The Straits Times, 6 Oct 2020

More details on when Singapore will enter the third stage of its phased reopening will be released by the multi-ministry task force in the coming weeks, said Deputy Prime Minister Heng Swee Keat yesterday.

This road map will include the expected timeline for moving to phase three, changes to current regulations on the size of group gatherings, and participation at mass events, Mr Heng told Parliament.

He was giving a ministerial statement on Singapore's fight against Covid-19, its fiscal position, and strategies for the country to emerge stronger from this crisis.

Phase two of Singapore's reopening was meant to last several months, even as more measures are lifted, while phase three is the "new normal" until a vaccine or treatment is found for Covid-19.

Last month, task force co-chairman Lawrence Wong said the Government was already working on a road map for the third and final phase, and that such plans would be shared when they were ready.

Yesterday, Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, said there are profound uncertainties ahead.

"In our fight against Covid-19, we are currently in a stable position, but we must remain vigilant. Amid the uncertainties, we are adapting to living with the virus."

To further reopen safely in the coming months, Singapore is adopting a four-pronged strategy to put itself in the best position to fight Covid-19, he said.

These four areas are: Securing early access to effective vaccines, enhancing testing capabilities, conducting swift contact tracing and isolation of infected individuals, and adhering to safe management measures.

Despite uncertainties about the global pandemic, such as how successful other countries are in containing it as they open up their economies, there is hope that Singapore can overcome this crisis, Mr Heng said.

On vaccines, Singapore is working very actively to secure early access to safe and effective vaccines, if and when they become available.

Mr Heng noted that Singapore is an early supporter of the Covid-19 Vaccine Global Access (Covax) Facility, which accelerates the development and production of, and equitable access to potential Covid-19 vaccines. Together with Switzerland, Singapore co-chairs the Friends of the Covax Facility to promote vaccine multilateralism.

Singapore is pursuing the procurement of Covid-19 vaccines with a number of pharmaceutical companies, supporting local efforts to develop one, and building up local vaccine manufacturing capacity, Mr Heng said.

On testing, the country has also increased polymerase chain reaction tests manifold, and is close to its target of being able to conduct 40,000 laboratory tests a day.

"We are also evaluating new testing technologies that are less invasive and can produce test results more quickly. This enhanced testing capability will help us safely resume more activities sooner," Mr Heng added.

As for contact tracing and isolating infected people, he said doing so swiftly was key to limiting the spread of the virus.

"Our contact tracing teams are doing a sterling job, and using digital tools well. The TraceTogether app, together with tokens that are being distributed nationwide, and the SafeEntry programme, enable contact tracing to reach the speed and coverage needed to rapidly contain viral transmission."

Safe management measures must also continue to be adhered to. "Keeping community infections low is the key to reopening our economy safely," he added.

DORSCON level to stay at orange till global situation improves; Singapore not safe until world is safe, says Health Minister Gan Kim Yong
By Timothy Goh, The Straits Times, 6 Oct 2020

The Disease Outbreak Response System Condition (DORSCON) level will continue to remain at orange until the global situation improves, Health Minister Gan Kim Yong said in Parliament yesterday.

He was responding to a question from Workers' Party MP Louis Chua Kheng Wee (Seng-kang GRC) on whether the Government would review Singapore's DORSCON level, given the significant drop in the number of daily local cases in recent weeks.

The DORSCON system is a colour-coded framework that provides general guidelines on what needs to be done during a disease situation.

The Republic's DORSCON level has been at orange since Feb 7, following a rise in unlinked local COVID-19 cases at the time.

According to guidelines by the Ministry of Health (MOH), this indicates that the disease is severe and spreads easily from person to person, but has not spread widely in Singapore and is being contained.

Moderate disruptions to daily life are to be expected at this level, such as temperature screening, quarantine orders and visitor restrictions at hospitals.

On the other hand, DORSCON yellow - the tier below orange - could mean that the disease is severe and spreads easily between people but is occurring outside of Singapore, or that it is spreading in Singapore but is either mild, or being contained.

Minimal disruptions are to be expected at this level, such as additional measures at the borders and healthcare settings.

MOH has said that the DORSCON categories are not cast in stone, but are general guidelines for action.

Earlier in the pandemic, "orange" measures such as quarantine and temperature screening were implemented while the DORSCON level was still at yellow.

Singapore has recently seen the number of new cases in the community drop to an average of about less than one to two a week.

But Mr Gan also pointed out that the DORSCON level is not determined by the number of cases alone.

"At this moment particularly, we have to be very mindful that while the number of cases in Singapore is low, the cases around us in other parts of the world are still rising. So, therefore, we cannot let our guard down. I would continue to maintain DORSCON orange for the time being until we're quite confident that the global situation is under control," he said.

He noted that Singapore is a hub city and needs to open its borders and encourage people to travel so that its status as a travel and business hub do not get undermined.

But he added: "Until the world is safe, we will not be safe. Therefore, we have to continue to maintain the DORSCON level and keep our guard up so that we can continue to keep the number of cases low, especially in the community."

Singapore to negotiate air travel bubbles with safe countries in push to reopen borders safely, says Transport Minister Ong Ye Kung in Ministerial Statement on 6 Oct 2020
Travellers who visit under such arrangement will be tested but not undergo quarantine
By Toh Ting Wei, The Straits Times, 7 Oct 2020

In another push to reopen its borders, resume general travel on a limited basis and revive its decimated air hub, Singapore is planning to start talks on air travel bubbles with countries that have managed the Covid-19 pandemic well.

Tourists and other travellers who come in under this proposed arrangement will be tested for the coronavirus, but would not have to be quarantined or follow a fixed itinerary, said Transport Minister Ong Ye Kung yesterday.

He noted in his ministerial statement that testing is the key to unlocking air travel, and to that end, a dedicated Covid-19 testing laboratory will be set up at Changi Airport in the next few months.

Singapore's status as an air hub has played a key role in attracting companies to invest heavily here, he noted. This is because companies know their various stakeholders can travel in and out of Singapore easily.

But connectivity has been severely hampered. For example, Changi now has direct flights to just 49 cities worldwide, down from 160 before the pandemic.

"We need to take proactive steps to revive the Changi air hub, as a top national priority," said Mr Ong.

"Our aviation hub status is essential, even existential, to the health of the Singapore economy, to our jobs and our future."

The Changi air hub and its adjacent industries contributed to more than 5 per cent of Singapore's gross domestic product and employed more than 190,000 people.

But the situation has become dire since Covid-19 struck. Changi Airport, which was the seventh busiest airport in the world in terms of international passenger traffic before the pandemic, has fallen to 58th place.

It is serving just 1.5 per cent of its usual passenger volume and 6 per cent of the usual number of passenger flights at the moment.

Several aviation companies - most notably Singapore Airlines (SIA) - have retrenched staff amid expectations of a long-drawn-out recovery for the air travel sector.

Mr Ong pledged that while the Government will continue to support SIA, Changi Airport Group and the aviation sector as much as it can, the best way to help them would be to restore passenger traffic in a controlled and safe manner.

Testing incoming travellers will be key to this move.

More Covid-19 tests will be allocated to air travellers, with Singapore on track to raise its testing capacity from 27,000 people a day currently to 40,000. It is also looking at faster and less intrusive tests.

Testing travellers must be complemented by the ability to trace contacts of infected cases and having a local situation under control, he said.

Singapore's results in controlling the pandemic - reflected in its low fatality rate and low community transmission - matter greatly to countries and regions seeking partners to restore aviation links, said Mr Ong. "The key is to make sure we stay safe and manage the risks while we open up aviation."

Pointing to how Singapore is establishing more reciprocal green lanes, facilitating transfers at Changi and unilaterally opening its borders to countries where the pandemic is under control, he said: "We cannot control what other countries want to do with their borders. But we can control ours, to welcome back visitors, bring back jobs, and revive our air hub safely."

Mr Ong added: "The message we want to send to the world is this - Singapore has started to reopen its borders. In the near future, if you have the virus under control and infection rates are as low as Singapore's, you are welcome to visit us, but travellers will be subject to a Covid-19 test, as a precaution."

Parliament will sit again next Wednesday.

Critical to revive Changi air hub, says Ong Ye Kung
Calling for support for Singapore to open up safely, he says status quo is not sustainable
By Lim Min Zhang, The Straits Times, 7 Oct 2020

The longer Singapore's borders remain closed, the greater the risk of the country losing its status as an air hub, said Transport Minister Ong Ye Kung yesterday.

The status quo - with Changi Airport serving just 1.5 per cent of its usual passenger volume - is not sustainable, he told Parliament.

"We cannot just wait around for a vaccine, which may take a year or two before it becomes widely available. Even then, we do not know if the vaccine will work as expected," he said. "So we need to take proactive steps to revive the Changi air hub, as a top national priority."

In a 30-minute speech, Mr Ong set out why Singapore's air hub status is critical to its economy, and asked for Singaporeans' support in this "critical endeavour" to open up slowly and safely.

Singapore's decision to close off its borders on March 24 to tourists and short-term visitors - much like what many governments did around the world in the face of an unknown and dangerous virus - has decimated air travel, he said.

Today, Singapore has fewer passengers than when it first opened Changi Airport Terminal 1 in 1981, he noted.

The closure has affected many other sectors, such as aerospace, tourism, hospitality, retail, entertainment and attractions, as well as taxi and private-hire car drivers.

"But what is most worrying is the longer-term impact on our entire economy. Our aviation hub status is essential, even existential, to the health of the Singapore economy, to our jobs and our future," said Mr Ong.

A key reason companies put significant investment in Singapore is its superior air connectivity, he said. This means customers, suppliers, partners and key executives can travel in and out of the country easily.

Mr Ong set out the steps that Singapore will take to open up its borders and revive air travel, to rebuild Changi as an air hub. These range from negotiating two-way air travel bubbles with safe countries and regions, to the continued pursuit of reciprocal green lane arrangements and facilitating passenger transfers at Changi Airport.

Singapore should also consider lifting border restrictions with countries and regions that have Covid-19 incidence rates comparable with the Republic's and comprehensive public health surveillance systems, said Mr Ong.

"Remember that we are small. Our domestic market is not a big bargaining chip. Instead, what we need to have is a mindset of generosity, required of a hub," he said, adding that this was why Singapore opened up its skies unilaterally when building up Changi Airport in the 1980s.

It is also why Singapore removed tariffs unilaterally for all countries decades ago. Despite this, many countries chose to negotiate air services and free trade agreements with Singapore, he said.

"Our partners know that by connecting to Singapore, they connect with the rest of the world. They chose to deal with Singapore because it is strategic to do so."

Concluding, Mr Ong said that while Singapore had to close its borders earlier this year to keep its people safe, the trade-off between lives and livelihoods is no longer as stark, and the two do not have to be at odds. This is because Singapore has learnt to control the virus, and testing is now much less of a constraint.

"Eventually, when there is a widely available and effective vaccine, air travel will resume. But in the meantime, we will have to learn to live with the virus - taking sensible precautions, while earning a living, and keeping hopes for our future alive."

What is at stake is not just hundreds of thousands of jobs, but Singapore's status as an air hub, its relevance to the world, its economic survival and, in turn, Singapore's ability to determine its own future, he said.

"We must open up slowly, carefully, and holding each other accountable for our collective safety. But open up we must."

Changi drops from 7th to 58th on busiest airport list, now serving 1.5% of usual passenger volume
Covid-19 has caused deep crisis for SIA, Changi Airport Group: Transport Minister Ong Ye Kung
By Hariz Baharudin, The Straits Times, 7 Oct 2020

Had it not been for major moves like cutting jobs, Singapore Airlines (SIA) would not be around today, Transport Minister Ong Ye Kung said yesterday, as he unpacked how Covid-19 has caused a "deep crisis" for the national carrier and Changi Airport Group (CAG).

Global travel restrictions arising from the pandemic have decimated Changi Airport's business, and while SIA has worked to stave off the worst of the crisis, the coast is far from clear, Mr Ong said in Parliament.

SIA has raised about $11 billion in liquidity since the start of the 2020/2021 financial year in April through avenues like a rights issue backed by Temasek, long-term loans secured on some of its planes, as well as committed lines of credit and a short-term unsecured loan from financial institutions.

Noting that SIA had recorded its largest quarterly loss on record in the first quarter of fiscal year 2020, Mr Ong said that it is trying its best to reduce cash burn, preserve its core capabilities and explore all ways to generate revenue.

He also pointed out that while SIA had made the tough decision to cut jobs, a recently concluded agreement with its pilot union for pilots to take deeper salary cuts meant it managed to reduce the number of retrenchments from 2,400 to 2,000. "Without the recent major capitalisation exercise, there would not be an SIA today, but it is far from being out of the woods," said Mr Ong in a ministerial statement on aviation recovery here.

He revealed that Changi Airport is now serving just 1.5 per cent of its usual passenger volume and 17 per cent of the pre-Covid-19 number of flights. It has also plummeted to be the 58th busiest airport for passenger traffic, down from seventh place.

This drastic drop in ranking is due to Singapore's small size and its reliance on international traffic, explained Mr Ong in response to Mr Gerald Giam (Aljunied GRC), who had asked why Changi is worse off compared with other airports.

Large nations like China and the United States have bigger populations who are not just flying within the country but also generating international traffic, he added.

CAG, too, has lost revenue streams, said Mr Ong. Shops and restaurants in the airport are seeing fewer customers, and many of them have closed. This has caused CAG to dip into its reserves to preserve cash to stay alive.

The upcoming Terminal 5, a large-scale project being undertaken by the group, will be paused for two years so that efforts can be focused on the pace of air travel recovery, said Mr Ong in response to Mr Liang Eng Hwa (Bukit Panjang), who had asked about the issue.

He added that no effort will be spared to support SIA, CAG and other companies in the aviation sector, and pointed out that the sector benefits from the highest tier of support from the Government's Jobs Support Scheme to co-pay salaries.

Other avenues of help for firms in the industry include cost relief through the Enhanced Aviation Support Package, and temporary redeployment programmes for workers affected.

Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) suggested Singapore ramp up its logistics and cargo movement capabilities, as Mr Ong had said that Changi Airport is serving 21/2 times more cargo flights now compared with pre-pandemic times.

These capabilities will be bolstered when demand for them increases, said the minister, but he warned that cargo flights are only 7 per cent of total flights and aviation cannot be restored by banking on cargo flights alone.


Mr Ong also touched on one of the suggestions by SIA to generate revenue and get pilots to fly by conducting flights to nowhere, where passengers pay to go on scenic voyages that would take off and land in the same airport.

Noting that some MPs like Mr Dennis Tan (Hougang) and Associate Professor Jamus Lim (Sengkang GRC) had asked if the Government would support this, Mr Ong said that this has become a moot point, as SIA said late last month that it would be scrapping this idea.

But he added the Ministry of Transport (MOT) would always try its best to support SIA in times of crisis, taking issue with Prof Lim's suggestion to impose an environment tax on the carrier had the flights taken off. "What I will not contemplate is to impose on them an environment tax at this time, as Associate Professor Jamus Lim indicated in his question, because that will just worsen the crisis for SIA," said Mr Ong.

Prof Lim later asked during question time why such a tax could not be considered further, as SIA could pass on the cost of such a tax to consumers - to which Mr Ong replied that Singapore was in a crisis and SIA needs as much help to preserve its cash as possible.

Explaining this with the Chinese proverb 落井下石 (luo jing xia shi), which means to throw a stone at someone who has fallen into a well and refers to making a bad situation worse, Mr Ong cautioned against exacerbating things for SIA. He added that further conversations about an environmental tax can carry on later when the Covid-19 situation improves.

Ministerial Statement – 15 Oct 2020 Debate Round-up Speech

Singapore has to stay open to the world, be united as it seeks to rejuvenate economy, says DPM Heng
Singapore must stay plugged into world to succeed: DPM
It must balance dual identity as an open city and a united, independent nation, he says
By Linette Lai, Political Correspondent, The Straits Times, 16 Oct 2020

Even as the Covid-19 situation in Singapore stabilises and the country shifts its focus to economic recovery, it needs to stay open and connected to the world, Deputy Prime Minister Heng Swee Keat said yesterday.

Managing the country's dual identity - as both city and nation - is critical to Singapore's success, he added.

As a city, it must remain open to new and exciting ideas.

As a nation, it has to stay united and defend its independence.

"These seemingly conflicting objectives are not choices, but necessities for us," Mr Heng said, rounding up two days of debate on the Third Supplementary Supply and Budget Adjustments Bill, during which 33 MPs spoke. "And they will always define us as a country, and guide how we manage our economy and society."

In his speech, Mr Heng recapped plans to rejuvenate the economy and spoke of how Singapore will shift its approach from broad-based help to more targeted support to help firms and workers stave off the worst effects of the pandemic.

He also addressed Singapore's fiscal outlook, noting that the country's medium-term revenues are expected to be subdued and uncertain, and outlining plans to ensure the country's financial security.

As a city, Singapore's global competition includes cities such as London, New York, Shanghai and Mumbai, said Mr Heng, who is also Coordinating Minister for Economic Policies and Minister for Finance.

All these cities have their own hinterlands and can draw talent from large national pools.

But Singapore, with its small domestic population of four million, has to assemble the "best possible team" to stay useful and relevant to the world.

"We want to make sure that we have the best players in our team, playing to one another's strengths, working together as a team," Mr Heng said. "This is why we must remain open to the best talents from all over the world. So that we can put forth the best team and step out onto the world stage."

Giving examples of how openness has benefited Singapore, he noted that global companies have set up operations here, bringing their know-how and networks, creating a vibrant ecosystem for local companies and start-ups and enabling them to be part of a global value chain.

Top talent has also chosen to call Singapore home and allowed locals to collaborate with the best. For example, Sir David Lane and his wife, Professor Birgitte Lane, have provided thought leadership that has spurred Singapore's advancements in the biomedical sciences, he said.

In addition, the country sends its top minds overseas to learn from others, through scholarship programmes such as that offered by the Agency for Science, Technology and Research.

At the same time, Singapore is making every effort to help its workers upskill and reskill, Mr Heng said. The future of work may be very different in a post-coronavirus world, he said, and the rise of digitalisation and the gig economy will make the job market more volatile.

"The new economy will require workers who are versatile and know how to build on existing skills, embrace lifelong learning, and be able to move between adjacent industry clusters," he added, calling on companies to play their part in developing training programmes for workers.

These efforts to upskill the Singaporean workforce, coupled with its openness to ideas, innovations and innovators, will help secure a better future for this country, Mr Heng said. "As a global city competing and collaborating with other global cities, it is crucial that we remain open, and at the same time, invest in our people," he added. "That way, we remain relevant and useful to the world."

Targeted support for businesses, workers as Covid-19 situation stabilises, says DPM Heng
Shift to targeted support for firms, workers: Heng
Move will help them stave off worst effects of pandemic; new steps to help ailing nightlife sector
By Hariz Baharudin, The Straits Times, 16 Oct 2020

Efforts to boost economic recovery and create jobs need to intensify, now that the Covid-19 situation has stabilised, said Deputy Prime Minister and Finance Minister Heng Swee Keat.

The move requires the Government to shift from broad-based relief measures to more targeted support so firms and workers can stave off the worst effects of the pandemic.

This will include new measures to help the ailing nightlife sector, Mr Heng said. The Government is finalising a set of measures to support nightlife businesses, which it will announce next week, he added.

It will also study how best to support self-employed workers, and consider extending the Jobs Growth Incentive (JGI) scheme - a tiered wage subsidy initiative that supports employers in their efforts to hire more Singaporeans and permanent residents.

Wrapping up the debate in Parliament yesterday on how Singapore can emerge stronger after Covid-19, Mr Heng said: "As the Covid-19 situation in Singapore stabilises, the next pressing task is to help our economy recover. Our support must therefore evolve from 'resuscitate' to 'rejuvenate'. To do so, we must shift from a focus on job retention to a greater emphasis on creating jobs."

Covid-19 is both a health and economic crisis, and the Government's priority initially was to channel support to affected people and businesses as quickly as possible. This support included the Jobs Support Scheme (JSS), where the Government co-pays salaries of local workers to help employers retain them.

But these measures had to be refreshed and new ones introduced to deal with the changing coronavirus situation. That is why the JGI was created, said Mr Heng, and JSS was extended and enhanced.

The JSS, which was first introduced as part of Budget measures in February, subsidised between 25 per cent and 75 per cent of wages paid for 10 months. After some tweaks, it now covers wages paid up to next March for firms in sectors hit hardest by the Covid-19 crisis, and up to December this year for sectors that are managing well.

Mr Heng said businesses here fall into different categories, and government assistance will be tailored to fit their needs.

First, firms experiencing a greater demand in business in the post-Covid-19 economy will be encouraged to make full use of capability grants to expand, and hire more local workers under the JGI scheme.

In the second category are firms suffering from a temporary drop in demand but are likely to eventually recover - for instance, in industries like tourism, aviation, the arts and sports, where help has been made available.

There are also firms in this category that will significantly impact Singapore's competitiveness or national security if they fail - so additional support might need to be given to them, Mr Heng said.

"In such instances, we cannot preclude the possibility of the Government taking some action to ensure these strategic capabilities are preserved. The exact form of support will depend on the circumstances, but the bar for any government action will be high."

He added that any aid given will be prudent and the Government will ensure public funds are well used.

In the third category are firms like those in the nightlife sector, whose outlook remains bleak due to fundamental changes in their operating environments, and which need help to reinvent themselves.

Workers, too, fall in different categories, and support from the Government will seek to take into account their specific needs.

For instance, mid-career professionals will get more help, especially those who have been retrenched and need to reskill to find new employment.

Former offenders could also fall into this group, and Mr Heng said the Manpower Ministry will announce more details of how the JGI scheme can be extended to include them.

Self-employed workers will also not be left out. The Government has already introduced the Self-Employed Person Income Relief Scheme to give relief to those with fewer means and less family support. It will study how more can be done to support this group of workers, Mr Heng said.

In the case of low-wage workers, many of them work on the front line and have been disproportionately affected by the pandemic and safe management measures. To help them, Mr Heng said the progressive wage model will be expanded to more sectors over time, while making sure businesses can cope.

"We will continue to monitor the situation closely and provide additional support where necessary," he said.

Each Singaporean family member got $1,500 in Covid-19 support
By Justin Ong, The Straits Times, 16 Oct 2020

Each member of a Singaporean household has received an average of $1,500 in Covid-19-related support, said Deputy Prime Minister Heng Swee Keat.

In addition, more than 300,000 Singaporean households have benefited from a voucher scheme launched by the community development councils (CDCs) in June to help needy families with daily expenses, he added.

A second tranche of vouchers - worth $50 each - will be given out in the next few months, he told the House yesterday.

The Government has moved decisively to take care of Singaporeans with an unprecedented $5.9 billion of household transfers this year, he said in a speech to round up a two-day debate on the Government's strategy to emerge stronger from the pandemic.

"This is the largest amount we have ever disbursed in a single year," he said, noting that more than 2.8 million Singapore residents have benefited from some combination of cash payouts from various support schemes.

The $1,500 in relief received by each household member on average is equivalent to about half a month of their income.

Lower-and middle-income households received more help from the Care and Support Package, Mr Heng said, noting that households in the bottom 50 per cent based on per capita household income got the equivalent of two months of their income on average.

Meanwhile, the CDC Vouchers Scheme, which also aims to support local hawkers and heartland merchants, has attracted sign-ups from more than 8,000 merchants.


Mr Heng also highlighted the importance of helping vulnerable groups such as seniors.

He pointed to the Seniors Go Digital movement launched in May, and the 1,000 digital ambassadors deployed to help seniors, hawkers and heartland enterprises acquire digital skills. More than 28,000 seniors have participated in at least one training programme as of end-September, he said.

He also acknowledged the mental health issues raised by MPs, and cited the Covid-19 Mental Wellness Taskforce and Youth Mental Well-being Network as positive examples of initiatives set up to tackle concerns in this area.

Mr Heng praised ground-up community movements founded to help those in need, such as Kampung Kakis, a neighbourhood buddy system to support the elderly, low-income families and vulnerable residents in the current crisis. "Volunteer 'kakis' were the additional eyes and ears of our grassroots leaders, who guided their 'kakis in need' to available resources and ensured vulnerable residents received assistance."

On top of such efforts, Mr Heng encouraged those who could to continue donating generously during this period.

Donations to Covid-19-related causes across key platforms such as the Community Chest, the Sayang Sayang Fund and Giving.sg hit a total of $100 million from January to August this year - more than the overall donations received by the Community Chest and Giving.sg for the whole of last year, he noted.

He cited American defence company Lockheed Martin, which donated the payouts it received from the Jobs Support Scheme to The Invictus Fund and The Courage Fund programmes set up by the National Council of Social Service.

"It is heart-warming to see the deep reservoir of social reserves that we have grown as a cohesive and resilient nation state," Mr Heng said.

"This is the spirit of SG Together in action - a community of deeds, where we support one another, combine our various strengths and make sure no one is left behind."

GST rate increase cannot be deferred indefinitely: Heng Swee Keat
Revenues crucial, so GST hike cannot be put off indefinitely
They are needed for securing nation's future, but timing of hike under careful study: Heng
By Lim Min Zhang, The Straits Times, 16 Oct 2020

While the goods and services tax (GST) rate will remain at 7 per cent next year, the increase cannot be deferred indefinitely as the revenues are needed to support Singapore's spending needs to secure its long-term future, Deputy Prime Minister Heng Swee Keat said yesterday.

Mr Heng said GST collections this year are projected to be down by 14 per cent from initial estimates before the start of the year, mainly due to travel disruptions and the impact of the circuit breaker period.

Collection of GST is also expected to stay lower than usual for a few more years until international travel recovers fully, he added.

In February, Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, had announced that the GST rate will remain at 7 per cent next year.

Yesterday, he assured Ms Foo Mee Har (West Coast GRC) that a $6 billion Assurance Package for GST has been set aside to help Singaporeans when the rate is eventually raised.

Ms Foo had earlier raised concerns about the impending GST hike amid the gloomy economic environment. Mr Heng said the Assurance Package will offset the GST increase for five years for most households, and 10 years for those living in one-to three-room flats.

Noting that over 60 per cent of GST collected from individuals and households comes from foreigners residing here, tourists and the top 20 per cent of households, Mr Heng said shelving the GST rate increase indefinitely - as Non-Constituency MP Leong Mun Wai had suggested - means forgoing the additional revenue from these groups that can be used to improve the lives of Singaporeans.

In response to a question by Mr Liang Eng Hwa (Bukit Panjang) on how the Government would balance its Budget with the revenue situation remaining weak, Mr Heng said that revenues in the medium term are expected to be subdued and uncertain for two reasons.

One is that global economic growth will likely remain weakened for several years, and the other is that the global competition for tax revenues can be expected to intensify, he said.

Even with these challenges, Singapore cannot lose sight of its goal to secure its long-term needs, such as those of public healthcare and pre-school education, he said.

The Government is studying how to strengthen its fiscal toolkit, Mr Heng said, and had been looking at borrowing for major long-term infrastructure even before Covid-19 struck. But its approach will be principled and prudent, he emphasised.

"We will borrow only for infrastructure that benefits multiple generations, and ensure that our debt level and future repayments are sustainable... We will not borrow just to make up for revenue shortfalls or be opportunistic in timing the market."

However, for recurrent spending like healthcare and education that benefits the current generation, the responsible way is to pay for them using recurrent revenues like taxes. "This discipline ensures that every generation earns and pays its share," he stressed.

In his speech, Mr Heng also touched on how the latest round of Covid-19 support measures he announced in August is being funded entirely from budget reallocation.

Addressing questions from MPs such as Mr Murali Pillai (Bukit Batok) and Mr Xie Yao Quan (Jurong GRC) on whether the Government was extending the time horizon or cutting back overall investment on key infrastructural projects, Mr Heng said the Government did an extensive scan to identify deferments or reductions in spending.

Some expenditures, such as those for MRT lines, Housing Board upgrading, and sewerage and drainage works, were deferred as a result of delays arising from the circuit breaker and the reopening of the construction sector after that. Other expenditures were lower than earlier projected due to Covid-19 and safe distancing measures.

"However, most of these are not savings but delayed spending, which will still be incurred in future years," he said. "These projects are needed to raise Singaporeans' standard of living and our economic development. We will push ahead when the conditions allow."

Major infrastructure projects are already being reviewed to account for the longer-term impact of Covid-19, said Mr Heng. An example is how the construction of Changi Airport Terminal 5 has been put on hold for two years.

There could be further deferments or reductions in scale if travel demand takes longer to recover, said Mr Heng.

Conversely, the need to build in more resilience and safety features could also raise project costs.

Plans to transform economy being refreshed
By Hariz Baharudin, The Straits Times, 16 Oct 2020

Work is under way to refresh Singapore's plans for transforming the economy, said Deputy Prime Minister and Finance Minister Heng Swee Keat.

Speaking in Parliament yesterday, Mr Heng addressed suggestions from several MPs on policy changes that will help businesses seize opportunities amid the disruptions caused by the Covid-19 pandemic.

For instance, Mr Edward Chia (Holland-Bukit Timah GRC) said the pandemic was disrupting global supply chains, and this was a good opportunity for local firms to expand into the region.

Mr Heng agreed. To help businesses keen on doing so, he said there are schemes that can help, like the Market Readiness Assistance Grant, Enterprise Development Grant and Double Tax Deduction for Internationalisation.

Mr Chia also said innovation in local firms can be bolstered by technology and design, which will help them stand out. Mr Heng said there is a need for firms here to work together across industries to innovate, and noted similar points made by Ms Jessica Tan (East Coast GRC) and Mr Shawn Huang (Jurong GRC).

Mr Heng also encouraged firms to tap the Government's Open Innovation Platform, which allows businesses to crowdsource innovative solutions from more than 9,000 companies for their problems.

Such efforts, he added, are part of moves to refresh the sector-specific industry transformation maps (ITMs) - introduced in 2016 to spell out specific plans to promote innovation, deepen capabilities and encourage links between complementary industries.

He said: "We are consulting widely across industries and firms as we refresh our ITMs."

Associate Professor Jamus Lim (Sengkang GRC) also spoke about activating a Plan B to get local firms to transform and go regional.

In response, Mr Heng said: "The fact of the matter is that this economic transformation has been our plan all along. And in fact, all these years, we have been reinventing our economy over and over again."

There are also opportunities for firms in the push for sustainability, he added, citing a point made by Ms Cheryl Chan (East Coast GRC) earlier on the importance of equipping workers with the relevant skills for the sustainability sector.

That is why Singapore has set up the Energy Efficiency Technology Centre, which offers programmes to train Singaporeans in these sectors, said Mr Heng.

The centre, which was launched last year and cost $5 million to set up, also helps small and medium-sized enterprises assess their energy efficiency and improve their energy performance.

Size and significance of $52 billion draw on reserves should not be played down, says DPM Heng
By Yuen Sin, The Straits Times, 16 Oct 2020

The size and significance of the unprecedented $52 billion that Singapore has drawn from its reserves should not be underestimated, Deputy Prime Minister Heng Swee Keat said in Parliament yesterday.

This has enabled Singapore to mount a quick and strong response to the fallout from the Covid-19 pandemic, he added.

He was responding to points made by Non-Constituency MP Leong Mun Wai, when wrapping up a two-day debate on the Government's strategy to emerge stronger after Covid-19.

Mr Leong, who is from the Progress Singapore Party, had said that the latest government financial statements as at end-March report that Singapore owns a total of $1.35 trillion in financial assets.

Taking into account the Net Investment Returns Contribution (NIRC), he said the decrease in Singapore's financial assets is $14.8 billion. The NIRC refers to the returns on investments of Singapore's reserves, and is the top contributor to government coffers.

This, he said, means that Singapore has used up only 1.1 per cent of its total financial assets to fight Covid-19 this year, and that there is no need for tax and fee hikes to take place so soon.

To this, Mr Heng said the Net Investment Returns (NIR) framework is based on expected long-term returns, not actual returns. "It is incorrect to estimate the actual return by multiplying the NIRC by two".

The DPM also said it is wrong to subtract the returns from the $52 billion to derive a net spending figure in considering the amount Singapore is spending from its reserves.

In addition to the draw, Singapore continues to spend the NIRC, which also comes from reserves.

"Furthermore, the amount drawn from reserves would have generated returns in perpetuity without a draw," noted Mr Heng, who is also Finance Minister and Coordinating Minister for Economic Policies.

While the draw on reserves would lead to some impact on the NIRC, the design of the NIR framework allows for a stable and sustainable source of income for Singapore's Budget, smoothed out over market cycles, he said in replying to Mr Louis Chua (Sengkang GRC).

"This means that when the projected returns and value of the net asset base goes down, we do not see an immediate proportionate decrease in NIRC. In the same way, in periods of sharp spikes in the market and asset values go up, we do not see an immediate increase and overspend," said Mr Heng.

In his response to Mr Gerald Giam (Aljunied GRC), who asked if the $52 billion drawn from the reserves would be returned in full or in part, and said that restoring the amount in a short time could subject Singaporeans to unnecessarily high levels of austerity, the DPM explained that there is no obligation under the Constitution for the Government to put back the amount drawn from past reserves.

"Rather, it is about having the moral obligation and sense of duty to current and future generations," he said.

Singapore remains committed to running a broadly balanced Budget over each term of government, and the Government will assess the viability of returning the amount drawn, depending on Singapore's fiscal position, he said.

He added that it is not possible for him to be definitive on how long it will take Singapore to build up sufficient surpluses to make up the $52 billion. "But I can say that it will not be two years, and I certainly hope it will not take us 50 years."

The Covid-19 pandemic has demonstrated how the reserves have allowed Singapore to remain nimble in times of uncertainty, said Mr Heng.

Singapore has to be more circumspect when it comes to using more reserves in the face of greater uncertainties ahead, he added.

The global economy and financial system will be more volatile, he said, with the build-up of debt globally introducing instability in the financial system, which can lead to or worsen crises.

Singapore is also seeing increasing risk of geopolitical conflicts and deglobalisation.

In a reply to Mr Liang Eng Hwa (Bukit Panjang), Mr Heng said that should it be necessary for the Government to further draw on the reserves amid the crisis, he is prepared to propose this to the President.

In the medium to longer term, Singapore's approach is to adapt and find new ways to generate growth, he added.

"We must work hard to get ourselves back in a position where our economy is growing and we can build up reserves for the future again. This is the sustainable and prudent way forward."

Of city-states and hard choices, as DPM Heng rounds up debate
By Grace Ho, Senior Political Correspondent, The Straits Times, 16 Oct 2020

Following a marathon 12-hour debate stretching over two days, and a lengthy exchange on whether to adopt a minimum wage, Deputy Prime Minister Heng Swee Keat on Thursday (Oct 15) set out two things in his round-up speech about the Government's strategy to emerge stronger from the pandemic.

First, the broader and unique context of the policy choices that Singapore must make.

Second, how these choices affect what lies ahead for workers, businesses, society and fiscal policy.

On the first point, he noted that Singapore, unlike many other countries, is both a city and a nation. Therein lies the tension between remaining open to people and ideas, and preserving a community that shares a common identity and destiny.

"Singapore is a city - open to new and exciting ideas," he said. "But we are also a nation - we have to make a living for ourselves, stay united and defend our independence."

The Government must continue to invest in its people, but this is no "straightforward matter", he added. Also, companies here are diverse and number several hundred thousand.

The list of support measures debated is too long to repeat here, but a few points bear noting.

First, Mr Heng was supportive of the suggestion by Mr Murali Pillai (Bukit Batok) to extend the 50 per cent Jobs Growth Incentive (JGI) wage support to ex-offenders.

Under the JGI, companies receive up to 50 per cent of the salary of each new local hire aged 40 and above. This was recently extended to persons with disabilities, regardless of age.

Earlier, Mr Gan Thiam Poh (Ang Mo Kio GRC) asked if the JGI could become a long-term policy - one that is coupled with state help to upskill workers.

To encourage the hiring of locals and their movement into growth sectors, Mr Leon Perera (Aljunied GRC) proposed fixed-term work passes for foreigners, and a redundancy insurance scheme where additional income support is tied to reskilling.

The Government, said Mr Heng, is also studying how to continue supporting self-employed persons beyond this year, when the Self-Employed Person Income Relief Scheme ends.

The question looming over all of this, is how the Government will replenish its coffers given that it is drawing up to $52 billion from past reserves to fund the support packages.

Responding to Mr Liang Eng Hwa (Bukit Panjang) on how the Government would balance its Budget, Mr Heng acknowledged that global economic growth is likely to be lacklustre for a few years, and global competition for tax revenues could intensify.

The Government had been looking to borrow for major long-term infrastructure even before Covid-19 struck, he said.

"This will help to spread out the hefty upfront costs equitably across current and future generations who will benefit from such investments."

He assured Singaporeans that the Government will not borrow just to make up for revenue shortfalls or be opportunistic in timing the market.

But for recurrent spending such as healthcare and education that benefits current generations, he said that the responsible way is to pay for them using recurrent revenues such as taxes.

Details on the timing of the goods and services tax hike were not forthcoming, but this is not entirely unexpected given the fluid economic situation.

"We will... (take) into account the pace of our economic recovery, our revenue outlook and how much spending we can defer to later years, without jeopardising our long-term needs," he explained.

On Progress Singapore Party Non-Constituency MP Leong Mun Wai's suggestion to shelve the GST rate increase indefinitely, Mr Heng had this to say: "Over 60 per cent of the net GST borne by all individuals and households is from foreigners residing in Singapore, tourists and the top 20 per cent of resident households.

"Mr Leong's suggestion... means that we will lose the additional revenues from these groups which we can use to improve the lives of Singaporeans."

It is hard to quarrel with the unprecedented level of government support given since the beginning of this year.

Occasional glitches aside, government agencies have moved with admirable speed, literally fine-tuning schemes by the week or month.

Yet some Singaporeans will inevitably be left out, and both real and perceived inequalities will continue to grow.

When it was revealed in the House on Thursday (Oct 15) that the incomes of workers in the 10th percentile now stands at $1,517 compared to $1,000 10 years ago, how many Singaporeans would - hand on heart - say they would be happy with a total salary hike of $517 over a decade?

Is it enough to make the lowest-income earners feel that they are marching in lockstep with fellow Singaporeans?

Even as the circuit breaker hit those in low-wage jobs disproportionately, low interest rates have buoyed asset prices and sparked a property-buying frenzy among the well-off.

The Government faces a deeply difficult economic and political landscape going forward, and as Mr Xie Yao Quan (Jurong GRC) said on Thursday, there is a need to maintain hope in society and in people's hearts.

One hopes that following the work of the Emerging Stronger Task Force, and ideas gathered from the Emerging Stronger Conversations, Singaporeans will have something to rally around - be it a project, a reinvigorated set of policy principles, or national vision.

But until then, Mr Heng has the unenviable task of managing expectations.

As long as Singapore continues to exist, the question is not whether there will be an externally induced crisis, but when, he said, adding: "In the medium to longer term, our approach is to adapt and find new ways to generate growth. We must work hard to get ourselves back in a position where our economy is growing and we can build up reserves for the future again.

"This is the sustainable and prudent way forward."


Ministerial Statement – 15 Oct 2020 Debate Round-Up Speech

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